Every year, 10,000+ leaders from across the healthcare industry come together in Las Vegas for the HLTH conference. For three days, providers, innovators, investors, gather to identify ways to ensure equitable, affordable, and accessible health for everyone. Ben Carraway, a Senior Associate on the BIP Ventures Investment team focused on healthcare tech, attended the 2024 event. He shares his highlights and main takeaways in this brief post.
The general sentiment about HC funding is shifting. Over the past 12 months, there has been some optimism about healthcare funding turning a corner, even though there has been relatively little proof in the data. Now, the market appears to be showing tangible signs of life, and general sentiment has picked up, especially for early-stage companies, where we're seeing more funding announcements. That said, there's a lingering skepticism about growth-stage companies because demand for capital still far outpaces supply. Once we're past post-election uncertainty, the expectation is for a general uptick in fundraising and exit activity. People are watching for implications for the ACA and for M&A activity among large insurers. Attention is on areas where the effects of the election could trickle down into earlier-stage companies.
Unsurprisingly, there was a flurry of AI talk from investors and founders. The focus of most AI interest appears to be on the administrative side of healthcare. Across various clinical settings, there are a few areas where we're seeing traction:
Most current AI solutions leverage existing LLMs (often several). There was a buzz around new medical-specific models that could break into more clinical use cases. Most are starting to focus on smaller niches. It's clear that there won't be a single fix or product that takes over the market and solves healthcare. The industry is too fragmented, problems too nuanced, and incentives too murky for a catch-all solution. We expect to see many small solutions in specific areas of healthcare.
Specialty-specific platforms continue to catch a lot of attention. At HLTH, they focused mainly on addressing underserved populations and cost overruns. We are excited about Cardiology, Oncology, Pediatrics, Women's Health, and Mental Health solutions. Some notable solutions are unlocking how clinicians can work – for example, using technology to allow clinicians to be present in environments where they can engage with patients they otherwise wouldn't see. Other solutions leverage technology to expand the type of care they can offer. These care models can help individual clinicians widen their reach and improve clinic economics. They also can help increase patient access and improve care coordination, while driving down overall costs of care.
Generally, the sentiment among investors at HLTH was positive. We noticed some differences between the stage of the investor. Later-stage investors have been waiting for the market to rebound for a while, so they've gotten fatigued looking for top-tier companies (e.g., $6-$50M companies growing 100% per year). Earlier-stage investors are still seeing new ideas and companies coming through, so they are more positive. In every case, investors we spoke with are tired of the uncertainty and are holding back a bit longer as they wait out the election cycle.
Even post-election, change will take time, but we think some of the frozen activity will shake loose. People expect the election outcome to impact some large M&A deals and that the private market will likely follow what the public market is doing.
Absolutely. The Change Healthcare shutdown had a wide-sweeping impact on providers and their vendors. Many companies are still recovering from the attack. For these healthcare businesses, the cyberattack felt a lot like the SVB collapse. It was a full-stop moment. The issue brought cybersecurity into full view and moved it up on the priority list for stakeholders across the healthcare ecosystem. Security breaches occur almost weekly, costing the healthcare industry an average of $10.1M per incident. (Hospitology, Vanta, HITRUST) The industry has been slow to adopt cyber solutions, and the attack has pushed them to rethink that approach and adopt solutions. Many healthcare leaders are thinking about how to diversify risk by considering where there are single dependencies. Unfortunately, this is a luxury that only larger companies can afford.
The HLTH conference always provides an atmosphere of genuine connections and conversations unique to the Vegas setting. It's fun and a great chance to meet with other investors, founders, and healthcare industry experts.
